NAA: A3917 VOLUME 6

Canberra, 4 September 1961

The decision of the United Kingdom Government to embark on negotiations for entry into the European Economic Community is of the greatest consequence not only to the United Kingdom and Western Europe but to countries outside Europe and not least to Australia. For Australia, it is one of the major decisions of our time, which could shape the pattern of our political as well as our trade relations for generations.

2. Many of the potential consequences of this decision are most welcome to Australia. We have long supported moves towards a strong Western Europe. We are, despite our geographical location, a Western European country not only by origin but also in our traditions and our culture. We believe that a strong Western Europe is one of the great pillars on which the security of the Free World should rest. The communique which was issued at the end of Mr Sandys' discussions with the Australian Government last month recorded that Australian Ministers 'saw merit in (European) unity since a continuing division in rival economic groups would be a source of danger and weakness, while a powerful and experienced group of free European nations can do so much to preserve the world's peace' .¹

3. But our concern, and the concern of Western Europe itself must not be exclusively with any particular area but with the whole of the Free World. Consequently, the communique also referred to the emphasis by Ministers that 'avoidance of a divided Western Europe should not be accomplished at the cost of division within the Commonwealth or elsewhere in the Free World'. We were therefore glad to note that, following the announcement of United Kingdom intention to negotiate, a number of European leaders decreared [sic] that they appreciated the need to maintain in full strength, the Commonwealth of Nations.

4. The economic effect for Australia of United Kingdom entry into the EEC could be most serious. These effects will need to be discussed in detail during the course of the United Kingdom's negotiations with the EEC. It is Australia's wish that, where our interests are directly affected, we should have the opportunity of participating directly in these negotiations to explain our interests and work out with the United Kingdom and EEC ways in which they might be protected. We expect to be taking up this question further with members of the EEC when arrangements for the negotiations are under consideration. However, before the detailed negotiations begin, the Australian Government would like to put before the ...² Government certain broad considerations which, in the view of the Australian Government, all countries in the Atlantic Community should keep in mind.

5. Australia is an important outpost of the Western World. In the area east of Suez, it has a marked strategic significance. As a strong, dynamic, self-reliant country, as a member of SEATO and of ANZUS, we are a source of strength to the Western World, particularly in a 'soft' area containing many small and neutralist countries which are a prime target of communist ambitions and offer no strong resistance to communist penetration. The political and strategic value of Western allies in this part of the world is to be judged not only by their present power, but also in terms of their reliability, their influence, their example and their potential. Australia has supported the common Western cause positively and energetically many times in the past–during the Berlin airlift and later Berlin crises, in Korea, in Malaya, in our attitudes to the puppet regimes in East Germany and Hungary. In these and many other matters, we have made common cause with the Western World and have the right to be considered as an integral part of it. Our future contribution could be even greater.

6. If Australia is to continue as an effective and active partner in the Western World, maintenance of its economic strength and continuing growth is essential. Australia is one of the world's great outlets for European settlement, including refugees to freedom from behind the Iron Curtain. The building up of a community drawn from European countries, as well as the United Kingdom, is one of the foundations of our present strength and one of the means by which we can accelerate our development in co-operation with Western Europe. Just as Australia provides a home for peoples of many European countries, it also provides a place for capital investment from Europe. The Australian economy, based on a sturdy free enterprise and strengthened by the investment and re-investment of a large part of its own resources, offers security and growth to foreign capital. Not less important, the growth of the Australian economy since the War has opened a greatly expanded market to the trading nations of the world. We are the eleventh largest importer in the world. Out of the ten countries ahead of us in gross import figures, only four are ahead of us in per capita terms. The bulk of our imports comprise manufactures of the Western World.

7. Our strength as an ally, and as a market for the products of the Western World depends in the final analysis on our own economic growth and export prospects. The value of any country to its partners depends largely on its economic vitality. Australia's value will greatly depend on the impact on our economic welfare of the decisions now being taken and about to be taken in Europe.

8. Ever since Australian trade reached substantial proportions, that is for more than a century, Australian export industries have been adjusted to an open market in the United Kingdom. The close association between Australia and the United Kingdom goes back a long way. The main fabric of our economy has been woven to the pattern of this relationship. Some industries are almost wholly dependent on the availability of the United Kingdom market. Other industries are dependent to the extent of such an important margin of their production and export that they would suffer grave distress if prices fell significantly and unsaleable surpluses accumulated. This is not a matter of small losses to be compensated by minor adjustments. It is a threat of major economic disruption, of the depression and even some depopulation of certain areas now given over to production for the United Kingdom market. It must be borne in mind that we cannot contemplate a static trade position. We must look forward to growth of markets–growth certainly no less than has occurred in markets for our exports in the last fifteen years–to sustain our population increase and economic development. If we could not look forward to growth of this kind, we would be confronted with a prospect of economic stagnation which would be intolerable to us and which would compel us to review many of our traditional attitudes. We might perhaps be forced, greatly against our will, to adopt illiberal trading policies which could only do damage to the Western World in terms of trade and investment.

9. Australia has never sought economic aid. Instead, we have been a donor of aid, first to the war-devastated countries of Europe and Asia immediately after 1945 and then to the under-developed countries for their longer-term needs. Whatever arrangements come out of the present negotiations and discussions, we would not want to be dependent on special aid or support. We would want to be in a position in which, in return for those benefits we can undoubtedly confer, we shall have a place of dignity and value as a member of the free world and shall have fair opportunities for trade and other mutually beneficial economic associations on reasonable terms. If Australia's opportunities in Europe can be preserved we would be better able to avoid any undue dependence upon alternative markets in the Sino-Soviet bloc, which might entail some loss of ability to give the same support as in the past to Western European interests.

10. The European section of the Free World has a responsibility to ensure that other parts of the world do not sag and sink. The buoyancy of the free world against Communism must be maintained on a worldwide scale–any part is neglected at its peril.

11. The forthcoming negotiations provide, in the view of the Australian Government, an opportunity to bring not only Western Europe, nor indeed only the Atlantic Community, but the whole Free. World into closer economic and political harmony. If this can be done, the Free World will not only provide an answer to extremist ideologies but will create a vision of the future in which all free countries will be eager to participate.

1 Document 150.

2 Each Australian embassy in Europe was instructed to insert the name of its respective country here.